Can New Rules Curb Prepaid Card Fees?
May 23, 2012
The Consumer Financial Protection Bureau (CFPB) recently announced plans to create new protections for prepaid cards, which often carry high fees. The agency said the rules would aim to rein in fees, increase transparency, and help consumers recoup stolen funds. "Prepaid cards have far fewer protections than bank accounts or debit or credit cards," said Richard Cordray, CFPB director. Some have warned, however, that new rules would only prompt the sector to create new fees in an effort to compensate for lost revenue. "I'm certain that the industry will subsidize any new legislation by increasing existing fees or adding new fees and then blame it on new legislation," surmised SmartCredit.com President John Ulzheimer. Still, consumer advocates welcomed the regulations as an important first step toward better protection for prepaid card holders, who U.S. Public Interest Research Group's Ed Mierzwinski said have been subjected to "the Wild West of the credit market." Jean Anne Fox of the Consumer Federation of America added that the cards should have similar rules to those of credit and debit cards, instead of operating as credit cards with fewer protection.
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